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Wisconsin Community Banker
March/April 2014
Wisconsin Agriculture:
Good Balance Sheets, Strong Earnings
Mary Lou Santovec
W
isconsin farmers experienced a silver lining in the
stormy economic clouds of 2013. According to
the annual Status of Wisconsin Agriculture report from
the University of Wisconsin-Madison’s Agricultural and
Applied Economics Department, the state’s net farm income
increased by some 14 percent to $3.75 billion.
“The agricultural economy is on the upswing,” said Rick
Klemme, dean, UW-Cooperative Extension. Klemme made
his remarks at the annual Wisconsin Agricultural Economic
Outlook Forum held early this year at UW-Madison.
The number of farms remains stable at 76,800 (approxi-
mately 10,500 are dairy) from a high of 200,000 in 1940.
Most are considered low sales (less than $150,000 in gross
income), off-farm occupation farms (operators who report
farming isn’t their primary occupation), and retirement
farms (where operators report being retired).
Other statistics: The average farm measured 195 acres. In
2012, the average age of the Wisconsin farmer was 56.
In a “renaissance of the dairy industry” last year, the all-
milk price was $20.25 a hundredweight, remarkable given
the rest of the economy’s sluggish recovery, Klemme said.
Milk production set a new high of 27.7 billion pounds.
Diversity within the industry helps even out the peaks
and valleys of volatile milk prices and leads to “very strong
earnings reaped by Wisconsin farmers,” said Bruce Jones,
professor of agricultural and applied economics.
Record earnings over the past three years have resulted
in a stronger collective balance sheet. In 2012, the debt-to-
asset ratio was 13 cents per dollar while in 2013 it was 11
cents. Assets have increased $12 billion over the past five
years.
Farmers are “taking their earnings and retiring debt,”
Jones said. Mortgage debt declined some $600 million from
2011 to 2012 while the value of farmland and buildings
grew more than $2 billion during that same time.
US Economy
The Federal Reserve’s monetary policy impacts domestic
food demand and agricultural exports. It’s also kept com-
modity prices down.
Unemployment and the labor force will influence future
growth of the nation’s economy. “Unemployment has not
been shared equally across the economy,” Jones said. Unem-
ployment has hit college graduates seeking jobs harder as
more people 55 and older are staying in the workforce.
The United States is still running a negative trade imbal-
ance. The value of the dollar against its trading partners
hasn’t risen but is holding steady. Fortunately there’s been
no slippage in agricultural exports.
With a favorable exchange rate, foreign consumers
bought a record $140.9 billion of agricultural exports. Most
exports headed to Mexico, Canada, and Asia.
Farm Inputs
The price of fertilizer, feed, and fuel are about the same
as they were in 2012. Cash rents remain high although fuel
prices are down.
For 2014, the outlook on farm input prices is mixed.
Corn and soybeans will register lower prices. Energy inputs
such as gas, diesel, and propane will be driven by crude oil
prices and the extraordinarily long, cold winter. Costs for
capital equipment and labor are going up.
Interest rates are hovering around 5 percent. Loan
demand has seen a steady decline while repayments have
been up since 2010.
>>>
Mid-size Family Farms
6.7%
Large Farms
2.4%
Very Large Farms
0.2%
Non- Family Farms
2.4%
Retirement Farms
12.1%
Off-Farm Occupation Farms
38.6%
Farming: Low Sales
28.5%
Farming: Moderate
Sales
9.0%
